COVID-19, in a matter of a few weeks, has turned everything we viewed as normal on its head. The valuations area is no different.
Companies and assets that were reaching all-time highs have seen precipitous declines and record volatility. This, of course, is not due to any underlying economic issue, but rather a health crisis that everyone knows (or at least dearly hopes) is temporary. In this environment, the complexity of valuations for transfer pricing and general tax purposes has increased tremendously. In addition, the recent declines in financial performance highlight various debt capacity and debt restructuring factors that may have previously been less critical. Valuation has always been viewed as more of an art than science, but in times like this, where so much is unknown and even less is known and knowable, there are a few steps multinational enterprises (“MNEs”) can take to adequately and reasonably navigate the challenging terrain.
This article, part of Baker McKenzie and Bloomberg Tax's Special Report, provides a brief discussion of the major areas of consideration.